According to data from IBIS, the phone repair market in the United States was valued at around $3.9 billion in 2019, making it a heavily fragmented and relatively small market that is mostly served by small businesses on a local scale.
The fact that the market is fragmented – many players with a small market share each – provides the opportunity for new players to easily enter if they can conceive an appealing value proposition for their prospective customers, while there is the possibility of securing small business financing to cover the cost of equipping the business with the tools needed to perform the services.
In the following article, we will take a closer look at how a phone repair business works, how does it generate money, and how much is needed to start one.
What does a phone repair business do?
A phone repair company primarily works as a business-to-consumer (B2C) model, often through a physical establishment located at a place where there is significant foot traffic or online, as a pick-up and delivery model.
These businesses can either specialize in a particular brand or they can perform basic repairs on the most popular phones in the market such as replacing components, performing in-depth maintenance, or solving software-related issues.
Most of the revenues generated by a phone repair business come from rendering these services – including the sale of any of the required components to fix the phone – although some establishments have opted to offer connected products like accessories – i.e. batteries, chargers, protective cases, etc.
The first step to start a phone repair business would be to enroll in a training program that teaches you how to perform basic to advanced fixes – whether that is for a particular brand or for an ample selection of them.
Secondly, you’ll probably need to incorporate the business if you want to lease a physical establishment or you can offer your services online to a local audience.
Meanwhile, some experts in the field suggest that the prospective owner of a phone repair business should work for a similar establishment for at least 6 months to polish his expertise and technical skills before offering his services independently.
Finally, the cost of starting a phone repair business could go from $2,000 to $5,000 depending on the tools, components, and parts required to perform the services.
One way to start is to offer the services online and offer pick-up and delivery services. This would generate a mobility expense that you should take into account when estimating the profitability of the company.
That said, if you plan to launch a bigger venture with a physical establishment the initial costs can go from $10,000 to $50,000 depending on the size of the commercial property you plan to lease, remodeling costs, and legal fees involved in completing the incorporation of the business.
Fortunately, these startup costs can be covered through one of the small business financing alternatives offered by Camino Financial, which include secured and unsecured loans for new businesses in the United States.
What about the profitability of the business?
The first thing you should know is that there will always be demand for phone repair, especially in today’s digital world where mobile phones have become practically an extension of the human body.
In this regard, the quality of your services will probably be the most important asset of the business and its most efficient marketing tool.
As for profitability, phone repair services are primarily an independent job that can even be considered a side-gig unless you plan to get serious about launching an actual store.
In this regard, the profitability will depend on the pricing of your services, the margins you earn on the components you install, and the extra revenue you generate from the sale of other products or services.
Statistics suggest that a cell phone repair technician might earn from $30,000 to $40,000 per year depending on the elements cited above.
Is it a good idea to launch this business then?
Based on the estimations provided above, if you are into technology and consider yourself a skilled individual when it comes to handling and repairing electronic devices, this business is an easy one to build or it can also be a rewarding gig.
Remember that small business financing is an alternative to fund those startup costs we outlined previously and you can fully cover the cost of borrowing with the proceeds obtained from the first few services your company performs.